LETŠENG DIAMONDS: Presiding Over a Kingdom of Gems

Lesotho has enjoyed a long and prosperous relationship with diamonds since the very first discovery in 1957. A few years later came the establishment of a small, yet weighty, mining industry, which took off during the 1960s and 1970s when the country’s mines yielded several large gems and came to employ thousands of people.

Peter Nixon discovered the Letšeng-la-Terai Kimberlite Pipes, made up of the Main Pipe and the Satellite Pipe, in 1957, during some work undertaken in the area. This was officially designated a ‘government digging’ in 1959, and by 1967 there were up to 6,000 local diggers on the site. The pipes are estimated to have produced 63,000 carats during this time, including the 601-carat Lesotho Brown.

The mine was later officially opened in November 1977 and scheduled to have a mine life of eight years; it in fact closed after five, in 1982, yet even from this brief foray a final production total of some 272,840 carats was recorded, recovered from 9.4 million tonnes of kimberlite and mainly sourced from the locality’s lucrative Main Pipe.

LESOTHO’S BRIGHTEST GEM

Letšeng Diamonds’s formation followed in 1995, beginning life as a partnership between industry investors and the Lesotho Government, each holding 76% and 24% respectively. In 1999 it acquired the mining rights for the colossal Letšeng Mine, situated over 3,000 metres above sea level in the Maluti Mountains of the Kingdom of Lesotho and said to be occupy the highest position of any mine in the world.

In July 2006, Gem Diamonds committed US$118.5 million to purchase the 76% majority portion of Letšeng Diamonds owned by Letšeng Investment Holdings, and today Letšeng Diamonds has two shareholders; the government of the Kingdom of Lesotho retains 30% of the operation following the finalising of the sale and issued share capital having been appropriately apportioned.

“We are committed to being a world-class diamond company, respected globally for optimising shareholder value through quality diamond processes, products and social responsibility,” Letšeng sets forth. “We continue to deliver exceptional returns for its shareholders, with annual production rising since the takeover from 55,000 carats in 2006 to 115,122 carats in 2021.”

The two kimberlite pipes from which Letšeng processes around 6.17 million tonnes of ore annually, the Main and the Satellite, are a duo bearing extremely low-grade ore averaging under two carats per hundred tonnes, as well as from existing stockpiles. Letšeng has grown to be one of the largest open pit diamond mines in the world and has gained widespread acclaim for its recovery of large, high quality, exceptional Type II diamonds, aided by initiatives undertaken in 2017 to unlock additional value at Letšeng which included reduced diamond breakage initiative projects, and a mining optimisation project.

“Letšeng Diamond Mine is famous for its large, top-quality diamonds,” Letšeng proudly states, “with the highest percentage of large diamonds making it the highest dollar value per carat kimberlite diamond mine in the world.”

Letšeng is no stranger to the production of historic diamonds, with the mine responsible for five of the 20 largest white gem diamonds ever recovered. In August 2011 the 550-carat Letšeng Star white diamond became Letšeng’s fourth major recovery since Gem Diamonds’s 2006 takeover, having been preceded by the 478-carat Leseli la Letšeng (‘Light of Letšeng’) in 2008, the 493-carat Letšeng Legacy in 2007 and the 603-carat Lesotho Promise in 2006.

This latter was the largest to be found in the 21st century to date, and just eclipsed the 601-carat Lesotho Brown recovered in 1967. Then, in January 2018, along came the Lesotho Legend, an exceptional diamond weighing in at 910-carat and labelled, “a landmark recovery for all of Gem Diamonds’ stakeholders,” by Gem Diamonds CEO Clifford Elphick. Another for the Letšeng books, the 442-carat high-quality type II diamond recovered in August 2020 had the honour of being the first of over 400 carats to be recovered since the Lesotho Legend, described as a beautiful, elongated white stone.

Letšeng Diamonds CEO Kelebone Leisanyane was keen to convey the shared benefits it would bring, coming on the heels of a suite of retrievals ranging from 23- to 163-carat. “Letšeng Diamonds is grateful to the Government of Lesotho for showing confidence in the mining industry during these difficult times of the COVID-19 pandemic,” he commented, “and for having designated mining as an essential service in an effort to keep the wheels of the economy rolling.

“The recovery of this remarkable 442-carat diamond, one of the world’s largest gem-quality diamonds to be recovered this year, will contribute immensely to the fiscus in the form of taxes, royalties and dividends, with a portion of the proceeds from the sale to fund a special community project.”

OPERATIONAL AND FINANCIAL PROGRESS

Long known for its commitment to the development of local talent within the company, the appointment of Motooane Thinyane and Makhomo Motaung, to the role of Head of Operations and Head of Finance respectively, ensures that every one of Letšeng Diamonds’s senior executive roles is now occupied by a Lesotho National. “I am happy to report that with the appointment of Ntate Thinyane and ‘M’e ‘Makhomo, the entire executive management of Letšeng Diamonds is now made up of Basotho,” said Leisanyane.

It means that Letšeng is moving forward with a further combined 35 years’ experience in local enterprise and specialist positions, as Gem Diamonds’s results show it continuing to go from strength to strength. Revenue rose to US$201.9 million from US$189.6 million in 2020, to produce profits from continuing operations of US$31.1 million compared to US$27.5 million. Operationally there was much to celebrate, too, with 2021’s 115,335 carats dwarfing the 100,780 carats of 2020, and treated ore rising to 6.2 million tonnes.

“Gem Diamonds has delivered positive operational and financial results notwithstanding the continued challenges brought about by the COVID-19 pandemic on the availability of skills, equipment, spares and other aspects of the supply chain,” assessed Clifford Elphick. “One of the Group’s priorities in 2021 was to safeguard its employees, contractors and surrounding communities from COVID-19 and it was able to operate uninterrupted throughout the year.

“The continuing recovery of the diamond market in 2021 was evidenced by the robust prices achieved for Letšeng’s large, high-value diamonds and there was also a significant improvement in the prices achieved for smaller diamonds. This resulted in positive cash flows and allowed Gem Diamonds to end the year in a strong financial position,” Elphick finished, with understandable positivity. “The Group has continued its climate change journey and our science-based approach will stand us in good stead over the coming years in managing the physical and transition risks, as we explore the opportunities that climate change might bring to our operations.”